Yahoo sues Facebook for infringing 10 patents

San Francisco, March 13, 2012

Yahoo sued Facebook over 10 patents that include methods and systems for advertising on the Web, opening the first major legal battle among big social media firms.

The lawsuit, filed in a San Jose, California federal court on Monday, marks a major escalation of patent litigation that has already swept up the smartphone and tablet sectors and high-tech stalwarts such as Apple, Microsoft Corp and Motorola Mobility Holdings.

Yahoo's patent lawsuit follows Facebook's announcement of plans for an initial public offering that could value the company at about $100 billion.

Facebook spokesman Jonathan Thaw said Facebook learned of the lawsuit through the media. "We're disappointed that Yahoo, a longtime business partner of Facebook and a company that has substantially benefited from its association with Facebook, has decided to resort to litigation," he said.

In an emailed statement, Yahoo said it is confident it will prevail. "Unfortunately, the matter with Facebook remains unresolved and we are compelled to seek redress in federal court," the company said in a statement.

Yahoo said late last month it was seeking licensing fees from Facebook over its patents and that other companies have already agreed to such licensing deals.

Colleen Chien, a professor at Santa Clara Law in Silicon Valley, said companies are usually more vulnerable to patent suits when they are in the IPO process.

"As a general proposition, when a company is about to go public, the last thing it needs is to get involved in a knock-down, drag out litigation fight," Chien said. "So that might make Facebook more willing to resolve its differences with Yahoo."

Yahoo has used similar timing to its advantage in the past. Google agreed to issue shares to Yahoo nine days before Google went public in 2004 in exchange for a license to Yahoo's patents. Google later took a $201 million non-cash charge related to the transaction. - Reuters